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HP is still disturbed by the internet in 2019



HP Inc.'s comeback hit a huge rate on Wednesday's birthday as something called "online" that is recorded with its print supplies.

HP

HPQ, -0.21%

revealed Wednesday that one of the biggest money makers, selling print supplies, is facing new pressures due to internet sales, pushing past juicy margins, especially on some overseas markets. HP found it surprising that customers bought their print supplies online, saying they had less of the market, and pricing is not for HP's benefit.

"We are now on a new battlefield and it's called" online ", says CEO Dion Weisler, giving some listeners of a particular age the feedback to the late 1

990s.

"We need new weapons to fight on the new battlefield," he said later. "You know we just can't bring a musket to a drone fight."

The PC and printer giant reported results for the first quarter that were weaker than expected, mainly due to an unexpected 3% fall in revenue in the supply business. A decline in HP's stock after the numbers hit significantly as the company's conference call continued, eventually ended with a decline in demand of nearly 13%.

While HP is renowned for hardware such as printers and PCs, the printer business segment is the major profile engine, thanks to the sale of products such as ink and toner, which businesses and consumers need to keep printers running. . HP's printing business makes twice as much profit with about half the revenue that the PC business does. In the first quarter, the PC business had a net revenue of $ 410 million before tax, with revenues of $ 9.6 billion, while the print service was $ 821 million before tax, on revenue of $ 5.0 billion.

HP said that utility revenue was weaker than expected and declined most in the EMEA region (Europe, Middle East and Africa), where it fell 9%. The company said that all commercial customers buy supplies online, and while having a leading share, there is a lower percentage than traditional commercial dealers and retailers.

"More online purchases have also led to a growing market for alternatives," an HP spokesman said. "We implement sharing enhancement plans, including online applications and targeted marketing, to address this."

HP's problem seems to be the impact of cheaper ink and toner options available from reproductions and aftermarket vendors, rather than HP-branded inks and toner.

"The purchase of competing ink / toner is not a new phenomenon that suddenly became a problem in the last quarter, but HPQ was not aware of how much competing online products had so far," said David Ryzhik, an analyst with Susquehanna International Group , in an email. "Another way, they overstated their own market share because they did not have so much visibility to" downstream "use recently."

HP's forecast requires a decline in supplies to continue throughout the rest of the year, with reference to price problems and high stocks, HP said that supply revenues will be around 3% this year, after earlier guiding the turnover flat or getting something in 2019.

Previously, HP had problems fake ink and toner, which the printers can now discover, Weisler said HP is working to counteract counterfeiting and protect its intellectual property rights and encourage services such as managed ink programs. The commentary on Wednesday's call made it sound like HP's writing business, just waking up to the issues of e-commerce age. Being a leader can also become complacency, which has given an unexpected mouth in its last recovery.

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